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Dentsu in transparency row

News, 22 September 2016

TOKYO: Dentsu, the leading Japanese agency, has admitted to "inappropriate operations" in some digital media trading carried out for clients, with initial reports suggesting that as many as 100 could be affected, including car giant Toyota.

According to a report by Mumbrella Asia, citing sources close to the matter, there have been 106 incidences of irregularities in digital media pricing – for which read overcharging – over a three-year period, all involving DASL, Dentsu's performance marketing business.

The agency said it had notified the affected clients and was consulting with them on "further steps that may be required", but declined to supply any further details.

Toyota, however, indicated that it was one of those involved in the emerging scandal, adding that "we value our relationships with our agencies and other partners".

The irregularities appear to have been first discovered during an audit of Toyota's digital media business which was subsequently extended across Dentsu's entire portfolio.

Observers expect that the agency's traditional media trading will now come under the microscope as well.

A former Dentsu executive told Mumbrella Asia last month that "most local [Japan] businesses are not overly concerned about transparency. If the agency provides enough for them in terms of service, then they are happy."

Takeshi Miyazawa, now managing director Japan at Universal McCann, added that the situation was starting to change as international hiring practices among clients were leading to the introduction of global best practices around media procurement.

But those practices may themselves actually encourage the very actions at the heart of the scandal.

A study earlier this year from the Association of National Advertisers in the US identified a "pervasive" lack of transparency in the media-buying process, and suggested that a focus by advertisers and their procurement departments on lower costs and extended payment terms was one of the factors leading to agencies seeking to make money by other means, such as (undisclosed) rebates.

Agency trade body the 4A's (American Association of Advertising Agencies) responded by criticising the report for being anonymous, one-sided and inconclusive.

Data sourced from Mumbrella; additional content by Warc staff